Evaluation of Options for Medical Malpractice System Reform
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Evaluation of Options
for Medical Malpractice
Michelle M. Mello System Reform
Harvard School of Public Health
Allen Kachalia A study conducted by staff from the Harvard School of
Harvard Medical School Public Health and the Harvard Medical School for the
Brigham and Women’s Hospital Medicare Payment Advisory Commission
•
MedPAC
601 New Jersey Avenue, NW
Suite 9000
Washington, DC 20001
(202) 220-3700
Fax: (202) 220-3759
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The views expressed in this report
are those of the authors.
No endorsement by MedPAC
is intended or should be inferred.
April 2010 • No. 10–2Evaluation of Options for Medical Malpractice System Reform
A Report to the
Medicare Payment Advisory Commission (MedPAC)
January 29, 2010
Prepared by:
Michelle M. Mello, JD, PhD
Professor of Law and Public Health
Harvard School of Public Health
mmello@hsph.harvard.edu
Allen Kachalia, MD, JD
Assistant Professor of Medicine, Harvard Medical School
Medical Director for Quality and Safety, Brigham and Women’s Hospital
akachalia@partners.orgEXECUTIVE SUMMARY The report synthesizes the evidence and theoretical predictions regarding the potential of several leading medical malpractice reform ideas to positively affect the performance of the medical liability system and its impact on health care delivery. For most reforms, the report analyzes evidence from well‐designed, controlled studies. Where such studies are unavailable, the analysis encompasses anecdotal reports, case studies, and descriptive findings regarding the operation of proposed systems or close analogues in the U.S. and foreign countries. For reforms that have not yet been tested, the report describes theoretical predictions about the likely effects of the reforms based on relevant scholarship in law and economics. The analysis covers 8 reforms that have been widely implemented by states: caps on noneconomic damages, pretrial screening panels, certificate of merit requirements, attorney fee limits, joint‐and‐ several liability rule reform, collateral source rule reform, periodic payment, and statutes of limitation/repose. It also examines 6 more innovative, less tested reforms: schedules of noneconomic damages, health courts, disclosure‐and‐offer programs, safe harbors for adherence to evidence‐based clinical practice guidelines, subsidized reinsurance that is made conditional upon meeting particular patient safety goals, and enterprise medical liability. The reforms are evaluated for their effects on the following outcome variables: malpractice claims frequency and costs, medical liability system overhead costs, health care providers’ liability costs, defensive medicine (including health care utilization and spending), supply of health care services (including physician supply and patient health insurance coverage), and quality of care. We find that although the evidence base for evaluating most traditional state tort reforms is substantial and mature, for most reforms, the evidence does not identify significant effects on the key outcome variables. The exception is caps on noneconomic damages, which have well‐documented effects on several of the outcomes. The evidence base for evaluating the innovative tort reforms is extremely small, as most have not been tested in the U.S., analogous systems are not clearly predictive of how they would function, and much depends on the choices made about system design. However, based on theoretical predictions and the limited evidence available, most of these reforms are promising enough to merit controlled experimentation in the U.S., such as through demonstration projects.
CONTENTS
1. Objectives ................................................................................................................................... 1
Table 1. Reform Options Evaluated ........................................................................................... 1
Table 2. Scope of Literature Search ............................................................................................ 3
2. Traditional State Reforms .......................................................................................................... 3
2.1. Caps on Noneconomic Damages ........................................................................................ 3
2.1.1. Key Design Features and Decisions .............................................................................. 3
2.1.2. Effects on Key Outcome Variables ............................................................................... 4
2.1.3. Summary ...................................................................................................................... 7
2.2. Pretrial Screening Panels .................................................................................................... 7
2.2.1. Key Design Features and Decisions .............................................................................. 7
2.2.2. Effects on Key Outcome Variables ............................................................................... 8
2.2.3. Summary ...................................................................................................................... 9
2.3. Certificate of Merit............................................................................................................ 10
2.3.1. Key Design Features and Decisions ............................................................................ 10
2.3.2. Effects on Key Outcome ............................................................................................. 11
2.3.3. Summary .................................................................................................................... 12
2.4. Attorney Fee Limits ........................................................................................................... 12
2.4.1. Key Design Features and Decisions ............................................................................ 12
2.4.2. Effects on Key Outcome Variables ............................................................................. 13
2.4.3. Summary .................................................................................................................... 14
2.5. Joint‐and‐Several Liability Reform .................................................................................... 14
2.5.1. Key Design Features and Decisions ............................................................................ 14
2.5.2. Effects on Key Outcome Variables. ............................................................................ 15
2.5.3. Summary .................................................................................................................... 17
2.6. Collateral‐Source Rule Reform .......................................................................................... 17
2.6.1. Key Design Features and Decisions ............................................................................ 17
2.6.2. Effects on Key Outcome Variables ............................................................................. 18
2.6.3. Summary .................................................................................................................... 19
2.7. Periodic Payment .............................................................................................................. 19
2.7.1. Key Design Features and Decisions ............................................................................ 20
2.7.2. Effects on Key Outcome Variables ............................................................................. 20
2.7.3. Summary .................................................................................................................... 21
2.8. Statutes of Limitations/Repose ......................................................................................... 21
2.8.1. Key Design Features and Decisions ............................................................................ 21
2.8.2. Effects on Key Outcome Variables ............................................................................. 22
2.8.3. Summary .................................................................................................................... 23
3. Innovative Reforms .................................................................................................................. 23
3.1. Schedule of Noneconomic Damages ................................................................................ 23
3.1.2. Key Design Features and Decisions ............................................................................ 24
3.1.2. Effects on Key Outcome Variables ............................................................................. 26
3.1.3. Summary .................................................................................................................... 28
3.2 Administrative Compensation Systems or “Health Courts” .............................................. 283.2.1. Key Design Features and Decisions ............................................................................ 29
3.2.2. Effects on Key Outcome Variables ............................................................................. 33
3.2.3. Summary .................................................................................................................... 35
3.3. Disclosure‐and‐Offer Programs ........................................................................................ 36
3.3.1. Key Design Features and Decisions ............................................................................ 37
3.3.2. Effects on Key Outcome Variables ............................................................................. 39
3.3.3. Summary .................................................................................................................... 41
3.4. Safe Harbors for Adherence to Evidence‐Based Practice Guidelines ............................... 42
3.4.1. Key Design Features and Decisions ............................................................................ 43
3.4.2. Effects on Key Outcome Variables ............................................................................. 45
3.4.3. Summary .................................................................................................................... 47
3.5. Subsidized, Conditional Reinsurance ................................................................................ 47
3.5.1. Key Design Features and Decisions ............................................................................ 48
3.5.2. Effects on Key Outcome Variables ............................................................................. 50
3.5.3. Summary .................................................................................................................... 52
3.6. Enterprise Medical Liability............................................................................................... 52
3.6.1. Key Design Features and Decisions ............................................................................ 53
3.6.2. Effects on Key Outcome Variables ............................................................................. 55
3.6.3. Summary .................................................................................................................... 58
4. Conclusions .............................................................................................................................. 58
Table 3. Summary of Evidence Concerning the Effects of Traditional Tort Reforms .............. 60
Table 4. Summary of Probable Effects of Innovative Tort Reforms ........................................ 611. Objectives
The objective of this report is to evaluate the prospects for several leading medical malpractice
reform proposals to positively affect the performance of the medical liability system and the system’s
impact on health care. During the 2009 federal health reform debate, and particularly since President
Obama’s September 2009 announcement that federal funds would be made available for pilot projects
of medical liability reforms, discussion has centered on several reform possibilities, a number of which
are considered innovative (Table 1). This report describes the essential features of each proposed
reform and synthesizes the best available evidence about the likely effects of each of 6 outcome
variables:
1. Claims: malpractice claim outcomes, including the number of claims filed, including the ease and
equity with which patients receive compensation, and claims costs
2. Overhead costs: malpractice system administrative costs, including litigation costs and insurers’
overhead expenses
3. Liability costs: malpractice liability costs for health care providers (i.e., malpractice insurance
premiums)
4. Defensive medicine: defensive medical practices and overall health care spending and
utilization
5. Supply: health care provider supply and patient access to care, including health insurance
coverage and cost
6. Quality of care: potential to foster evidence‐based care and improve patient safety
Table 1. Reform Options Evaluated
Reform Basic Description
Traditional State Reforms Reforms that have been widely implemented at the state level
Caps on noneconomic damages Limit the amount of money that a plaintiff can take as an award for
noneconomic losses, or “pain and suffering”, in a malpractice suit.
The cap may apply to the plaintiff, limiting the amount she may
receive, or to each defendant, limiting the total amount for which
each may be liable.
Pretrial screening panels Panel reviews a malpractice case at an early stage and provide an
opinion about whether a claim has sufficient merit to proceed to
trial. Typically, a negative opinion does not bar a case from going
forward, but can be introduced by the defendant as evidence at the
trial.
Certificate of merit Requires a plaintiff to present, at the time of filing the claim or soon
thereafter, an affidavit certifying that a qualified medical expert
believes that there is a reasonable and meritorious cause for the
suit.
Attorney fee limits Limits the amount of a malpractice award that a plaintiff’s attorney
may take in a contingent‐fee arrangement. The limitation is typically
expressed as a percentage of the award; it may also incorporate a
maximum dollar value.
Joint‐and‐several liability reform In cases involving more than one defendant, such as a physician and
a hospital, this reform limits the financial liability of each defendant
1to the percentage fault that the jury allocates to that defendant.
Without this reform, the plaintiff may collect the entire amount of
the judgment from one defendant if the other(s) default on their
obligation to pay, even if the paying defendant bore only a small
share of the responsibility for what happened to the plaintiff.
Collateral‐source rule reform Eliminates a traditional rule that if an injured plaintiff receives
compensation for her injury from other sources, such as health
insurance, that payment should not be deducted from the amount
that a defendant who is found liable for that injury must pay.
Periodic payment Allows or requires insurers to pay out malpractice awards over a
long period of time, rather than in a lump sum. This enables insurers
to purchase annuities (sometimes called “structured settlements”)
from other insurance companies which cost less than paying the
whole award up front. Insurers are also able to retain any amounts
that the plaintiff does not actually collect during her lifespan.
Statutes of limitations/repose Limits the amount of time a patient has to file a malpractice claim.
Statutes of limitations bar suits unless they are filed within a
specified time after the injury occurs or is discovered. Statutes of
repose bar suits unless they are filed within a specified time after the
medical encounter occurred, regardless of whether an injury has yet
been discovered.
Innovative Reforms Reforms that have had limited or no implementation in the U.S.
Schedule of noneconomic A hierarchy or tiering system is created for purposes of categorizing
damages medical injuries and creating a relative ranking of severity. A dollar
value range for noneconomic damages is then assigned to each
severity tier. The schedule is used by juries and judges either as an
advisory document or as a binding guideline.1
Administrative compensation Routes medical injury claims into an alternative adjudication process
systems or “health courts” involving specialized judges, decision and damages guidelines,
neutral experts, and (under most proposals) a compensation
standard that is broader than the negligence standard.
Disclosure‐and‐offer programs Institutional programs that support clinicians in disclosing
unanticipated care outcomes to patients and that make rapid offers
of modest compensation in appropriate cases.
Safe harbors for adherence to Provides a legal defense to medical malpractice claims if a defendant
evidence‐based practice health care provider can show that an applicable, credible clinical
guidelines practice guideline was followed in caring for the plaintiff.
Subsidized, conditional State or federal government provides reinsurance to health care
reinsurance providers at discounted or no cost if they achieve patient safety
goals.
Enterprise medical liability Broadens the prospects for holding health care organizations, such
as hospitals and managed care organizations, directly liable for
medical injuries, in addition to or instead of holding individual
clinicians liable.
Our evaluation is based on existing empirical studies of state tort reforms, including a
comprehensive synthesis published in 20062; case studies and anecdotal reports of particular federal,
2state and institutional programs; legal scholarship on the structure and theoretical basis of reforms; and,
where no evidence is available, our own judgments. In synthesizing extant empirical research, we do
not include the large “grey literature” of reports issued by advocacy organizations, relying instead on
academic, government, and foundation reports that meet accepted standards of scientific rigor. For
studies evaluating the effects of tort reforms implemented in the states, this meant exclusion of study
findings based solely on univariate or bivariate analysis, rather than a well‐controlled multivariate
regression analysis. A summary of data sources consulted is presented in Table 2.
Table 2. Scope of Literature Search
Source Sources and Scope of Search
Legal literature Westlaw’s “Journals & Law Reviews” combined library, 1990‐2009;
Social Science Research Network (unrestricted date search); older
articles cited in more recent works
Health and medical literature PubMed, 1990‐2009
Economics literature EconLit, 1990‐2009; Social Science Research Network (unrestricted
date search); older articles cited in more recent works
Government reports Reports collected on websites of the Congressional Budget Office,
General Accountability Office, Office of the Assistant Secretary for
Planning and Evaluation, Office of Technology Assessment (archive),
and Agency for Healthcare Research and Quality, 1990‐2009;
website of the Washington State Task Force on Noneconomic
Damages
Foundation reports Reports collected on websites of the Institute of Medicine, Robert
Wood Johnson Foundation, Kaiser Family Foundation,
Commonwealth Fund, and Pew Charitable Trusts (unrestricted date
search)
Other RAND Compare Dashboard3; 2006 literature synthesis by Mello2
2. Traditional State Reforms
2.1. Caps on Noneconomic Damages
Caps on noneconomic damages limit the amount of money that a plaintiff can take as an award for
noneconomic losses, or “pain and suffering”, in a malpractice suit. The rationale for this reform is to
reduce the number of multi‐million dollar awards, which are difficult for liability insurers to plan for and
pay and which may pose special difficulties for health care facilities that are self‐insured. It is also
motivated by a desire to reduce the high degree of variation4 and perceived arbitrariness in jury awards
for “pain and suffering”. Twenty‐six states currently impose a cap on noneconomic damages and 6 cap
total damages. Medical professional societies strongly desire to see noneconomic damages caps
adopted in the remaining states, through state legislation or imposition of a federal cap.
2.1.1. Key Design Features and Decisions
Key design choices for noneconomic damages caps include the following:
3 Amount: Although the oldest and most widely publicized example of a noneconomic damages
cap, California’s, is $250,000, most states have found it politically difficult to implement such a
stringent cap in more recent rounds of reform. It is more common for states to set the cap at
$500,000 or more, and to opt for a tiered cap in which different amounts apply to different
kinds of injuries. The appeal of a flat cap is its simplicity and, when set at a low amount, greater
potential for cost control. The appeal of a tiered cap is its greater vertical equity—that is, more
severe injuries are eligible for a higher award.
Indexing: Some states adjust their caps for inflation, while others do not. If California’s cap had
been adjusted for inflation, it would be over $1 million today. Indexing maintains the intent of
the legislature adopting the cap as to the appropriate valuation of noneconomic damages in real
dollars, while declining to index provides greater long‐term ability to constrain costs.
Applicability to claims: Most states apply their cap to all medical malpractice injuries, but some
limit it to particular kinds of claims—for example, wrongful death claims or claims relating to
emergency department care. A decision to carve out particular types of claims may reflect
legislative concern about liability stress within a certain clinical specialty or the potential for
unpredictable, large damages awards for certain kinds of injuries.
Applicability to litigants: A cap may be applied to the plaintiff, limiting the amount he may
receive, or to each defendant, limiting the total amount for which each may be liable. The latter
choice reflects a particular notion of equity, though it may result in inequitable awards in cases
where multiple defendants have different shares of fault for causing the plaintiff’s injury.
Judicial waiver: Caps rules may allow a judge the discretion to waive the damages cap in cases
where its application would seem especially unjust. The price of avoiding injustice in this
fashion is lesser predictability around damages awards.
2.1.2. Effects on Key Outcome Variables
The evidence base concerning the effects of noneconomic damages caps is now quite mature. Although
some studies have had conflicting findings, a fairly robust set of conclusions can be drawn based on the
strongest studies.
Claims Frequency and Costs.
The evidence concerning the effects of damages caps on claim frequency is mixed. Two recent studies
found that caps were associated with lower claim frequency,5‐6 while two have found no association.7‐8
The theoretical link is that caps discourage plaintiff’s attorneys from filing claims by lowering the
expected value of the case, which in a contingent‐fee system affects the attorney’s expected return on
investment. Overall, the evidence is too equivocal at this time to support a conclusion about the effect
of caps on claim frequency.
Most studies of the effects of caps on claims payouts have found a significant effect, typically on the
order of a 20 to 30 percent reduction in average award size.5‐6, 9‐14 One recent simulation analysis of the
$250,000 cap adopted by Texas in 2003 differentiated its effects on payouts from jury verdicts and
4settlements, finding that the proportional reduction was larger for the former (27 percent average
reduction) than the latter (18 percent average reduction).14 One study found that caps significantly
reduced total insurer losses in some, but not all, econometric models.15 Finally, 3 studies did not find an
effect of caps on payouts,6, 8, 16 and one found an effect on claims payments in a regression model that
used individual claims as the unit of analysis, but not in a model using states as the observational units.16
A null finding is difficult to explain, since the literal effect of caps is to reduce awards. It is typically
explained by theorizing that caps change the mix of cases that are brought, such that the reduction in
average awards due to the cap is offset by an increase in the average award due to an increase in the
average severity of the injuries represented. Overall, the weight of evidence favors the conclusion that
caps affect payouts.
Caps also have implications for the vertical and horizontal equity of payouts. Vertical equity refers to
the extent to which awards increase with the severity of injury, while horizontal equity concerns the
degree of homogeneity in awards for injuries of similar severity. Depending on the level at which they
are set, and how this level compares to public judgments about appropriate compensation for very
severe injuries, caps may undermine vertical equity. They may make awards for the highest‐severity
injuries the same as awards for less severe injuries. With respect to horizontal equity, caps are likely to
make awards for the highest‐severity injuries more uniform—they should fall at or near the cap.
Overhead Costs.
One study has examined the effects of caps on defense costs in malpractice litigation, finding that caps
were associated with a significant cost increase.17 This is counterintuitive to the dominant theory about
the effect of caps, which is that they encourage more rapid settlement by increasing certainty about the
value of the case. However, the authors offered an alternative explanation: their result could reflect a
greater propensity among insurers to allow cases to go all the way to trial, since the downside risk of
trial is lower in jurisdictions that cap awards.
Liability Costs.
The effect of damages caps on malpractice insurance premiums has been the subject of intense
controversy. The issue has been exhaustively studied, with mixed findings among well‐designed studies.
Four studies have identified significant effects of caps,13, 18‐20 while four older studies found no effect.8, 12,
16, 21
A reasonable conclusion based on strong, recent studies is that caps moderately constrain the
growth of premiums over time, with an effect on the order of 6 to 13 percent.2 One recent study20
found larger effects—17 to 25 percent, depending on the specialty—but did not make an important
market‐share adjustment to its premium data.
The Congressional Budget Office (CBO) recently estimated the cost of a package of 5 reforms
implemented together in all states: a $250,000 noneconomic damages cap, a punitive damages cap of
$500,000 or twice the economic damages award, collateral‐source offsets, a 1‐year statute of limitations
for adults and 3‐year limit for children, and joint‐and‐several liability reform. Recognizing that many
states already have some or all of these reforms in place, CBO estimated the marginal impact of the
package as a 10 percent reduction in total national premiums for malpractice insurance.22
Defensive Medicine.
5There is good, but not uniform, evidence that damages caps are associated with lower rates of
utilization of services that are considered to be indicators of defensive medicine. The best‐known study
of defensive medicine, by Daniel Kessler and Mark McClellan, found that states with one or more
“direct reforms” (including damages caps, abolition of punitive damages, no mandatory prejudgment
interests, and collateral‐source rule reform) had significantly lower Medicare hospital payments for
ischemic heart disease and myocardial infarction.23 A more recent analysis of overall Medicare
expenditures, however, found that these reforms had no significant effect on spending on patients with
myocardial infarction, breast cancer, diabetes, or stroke.24 Study findings regarding cesarean section are
mixed,2 but two strong, recent studies find caps to be predictive of lower rates of cesarean section.25‐26
CBO’s current judgment about the association between tort reforms (including but not limited to
damages caps) and the use of health care services is that “the weight of the empirical evidence now
demonstrates a link.”22 This finding supersedes its earlier conclusion that the evidence of a link between
tort reforms and health care spending was quite limited and was confined largely to spending in the
Medicare program.27 Its current cost model estimates that nationwide implementation of the package
of 5 reforms listed above would result in a 0.5 percent decrease in total national health care
expenditures.22 Another recent analysis (albeit one with methodological weaknesses) also found a
significant relationship between caps and health care expenditures per capita, estimating that caps
resulted in a 3 to 4 percent savings.28
Supply.
There is moderate evidence that damages caps modestly increase the supply of physicians in a state,
although studies have returned mixed findings.2 One study with a very strong methodology found that
states with caps and other “direct reforms” experienced 3 percent higher growth than states without
caps.29 Other studies, some of which are unpublished, have found effect sizes in the 2 to 12 percent
range.30‐32 A recent study differentiated the effect on physicians in urban and rural areas, finding it to be
significant only for rural physicians, with an effect size of approximately 5 percent.30 Another examined
only obstetrician‐gynecologists and found no effect.31 Finally, one unpublished analysis examined the
number of hours physicians worked per year and concluded that damages caps had a significant,
positive effect.32
It is difficult to draw conclusions about the effects of damages caps on health insurance coverage.3 The
theory underlying a relationship between caps (and all other liability‐limiting tort reforms) and health
insurance coverage is that the reforms will decrease defensive medicine, thereby lowering health care
costs, thereby lowering health insurance premiums, thereby increasing the number of people who can
afford insurance. This connection is quite remote.
Two studies have examined the relationship between damages caps and employer‐sponsored health
insurance premiums. One found no significant association,33 while the other found that caps were
associated with significantly (1.3 percent) lower premiums for self‐insured plans, but no significant
differences for fully insured plans, most of which were HMOs.34 One unpublished study found a
significant, negative association between the presence of a cap and the percentage of state residents
under the age of 65 without health insurance, but the study did not control for the presence of other
tort reforms.35 Overall, the evidence concerning the effects of damages caps on physician supply
suggests a modest, positive effect, while the evidence concerning health insurance coverage and cost is
too limited and equivocal to draw a conclusion.
6 Quality of Care.
The effect of damages caps and other tort reforms on quality of care has not been directly studied. As a
proxy, several groups of researchers have examined the relationship between tort reforms and patient
outcomes, but this is unsatisfactory for a number of reasons. Mortality, the outcome variable of choice
in most studies, is a crude indicator of patient outcomes. More importantly, outcomes may bear only a
weak relationship to quality of care.
One study of birth outcomes has found that noneconomic damages caps are associated with a
statistically significant reduction in preventable complications of labor, but not in infants’ Apgar scores.26
Others have found no association between damages caps and patients’ health or mortality.23, 2436‐37
Overall, the evidence base is not sufficient to draw inferences about the relationship between caps and
quality of care.
2.1.3. Summary
There is a good evidence base regarding the effects of damages caps, though studies have returned
mixed findings. The weight of the evidence suggests that caps achieve substantial savings in average
claims payments, modestly constrain the growth of malpractice insurance premiums, modestly improve
physician supply, and reduce at least some defensive medical practices. They may increase litigation
expenses. Evidence concerning their effects on claim frequency, health insurance, and quality of care is
too limited or equivocal to support firm conclusions.
2.2 Pretrial Screening Panels
The function of pretrial screening panels is to review a malpractice case at an early stage and provide an
opinion about whether or not the claim has sufficient merit to proceed to trial. Typically, a negative
opinion does not bar a case from going forward, but can be introduced by the defendant as evidence at
the trial. The rationale for this reform is to reduce the number of nonmeritorious malpractice claims,
and the litigation expenses incurred in defending them, by bringing expert judgment to bear before a
large amount of legal expenses are incurred. Additionally, panel decisions can provide juries with a
neutral source of expertise in cases that go to trial.4 About 20 states currently have pretrial screening
panels of some kind. Screening panels have been repealed in at least 7 states and overturned by courts
on constitutional grounds in at least another 5.4
2.2.1. Key Design Features and Decisions
Key design choices for pretrial screening panels include the following:
Timing of review: There is some variation across states in the length of time between the filing
of a claim and review by the panel. Longer time periods permit the plaintiff a longer period in
which to obtain information in support of the claim, but result in higher litigation expenses as
the discovery period progresses.
7 Composition of the panel: All states have included physician representation on the screening
panel, but states vary as to whether nonphysicians (for example, judges, lawyers, and
laypersons) are represented.
Matters evaluated: Most screening panels evaluate only the merit of the case, but a handful of
states have panels that also suggest a recommended amount of damages for meritorious cases.
Effect of the decision: Among the alternative consequences of the panel’s decision that a claim
is nonmeritorious are (1) the claim is precluded from advancing; (2) the claim can proceed, but
evidence of the panel’s decision may be introduced by the defendant at trial; and (3) the claim
can proceed, but the plaintiff must post a bond or in some other way provide an up‐front
payment that is forfeited to the defendant if the plaintiff does not prevail in the litigation.
Mandatory vs. voluntary: Some states have opted for voluntary rather than mandatory pretrial
screening. The rationale for voluntary screening is to create a venue for the parties to get an
early, expert opinion about the case, which may encourage settlement or abandonment of the
claim.
Financing: The costs of running the screening panel could be borne by the state or federal
government, or could be borne by the parties to litigation through user fees. Some states have
adopted a “loser pays” system.
Discovery powers: In order to ensure that plaintiffs have access to sufficient information to
present their case before the panel, some states allow the plaintiff to conduct discovery prior to
the panel hearing; some also require that the defendant(s) comply in a timely fashion with
discovery requests.
2.2.2. Effects on Key Outcome Variables
Claims Frequency and Costs.
Theoretically, screening panels should decrease the number of claims that progress to a mature stage
and the number and cost of payouts in nonmeritorious cases. However, there is no evidence that they
accomplish these objectives. No controlled studies have identified statistically significant effects on
claim frequency or payouts, while 7 have found no association.6, 8‐1138‐39 Some single‐state, descriptive
studies have actually identified a higher rate of claiming in the years following implementation of
screening panels than in the years prior.4 The reasons that claiming is not reduced are unclear. It may
be that screening panels simply do not issue an adverse decision in many cases, or it is possible that
plaintiff’s attorneys pursue claims notwithstanding adverse panel decisions because they view panels as
biased and unreliable.
Overhead Costs.
Screening panels involve costs. Even if panel members serve on a volunteer basis, there are overhead
expenses for convening panel meetings. In states where full hearings are held, both the panels and the
litigants incur additional expenses for preparation, which may include substantial discovery activities. It
is unknown whether these extra costs are offset by cost savings associated with (1) the termination of
8some cases following the panel’s decision, or (2) earlier settlements reached after a panel decision
indicating the claim likely has merit.
Most expert commentary expresses the view that panels likely increase litigation costs overall.4 Single‐
state, descriptive studies of screening panels have also reached this conclusion. They have found that
although panels decrease the number of claims that go to trial, they cause significant increases in
average time to claim resolution.40 Two multivariate studies of the issue have been conducted. One
found that mandatory pretrial screening was associated with a significant reduction in defense costs.17
The other, which had methodological limitations, found that defense costs and the time from incident to
resolution of a malpractice claim did not differ in states that had no screening panels, optional panels, or
mandatory panels.38 Overall, the evidence concerning insurers’ defense costs is inconclusive, though it
is fairly clear that screening panels involve administrative costs to run.
Liability Costs.
Three studies have examined the relationship between screening panels and malpractice insurance
premiums. One study found a significant effect,21 while the others (one of which was methodologically
stronger8 and one of which was weaker38) did not. Overall, there is not a strong basis for concluding
that premiums are affected. Theoretically, one would not expect a strong effect, since the effects on
claiming and litigation expenses appear to be weak or adverse.
Defensive Medicine.
The effect of screening panels on defensive medicine or health care spending has not been extensively
investigated. Theoretically, the relationship would seem to be very remote. Only if physicians believed
screening panels were an effective bulwark against nonmeritorious claims would an effect on defensive
medicine be plausible. One study found that states with pretrial screening panels had significantly lower
rates of cesarean section and higher rates of vaginal birth after cesarean section, suggesting that
physicians may indeed perceive the panels as protective.25
Supply.
No information is available regarding the effect of screening panels on physician supply. The
relationship would seem to be very remote. An effect would only be seen if physicians believed strongly
enough in screening panels to migrate to states that had them, which seems implausible in light of the
prevalence of screening panels and continued high levels of malpractice fear among physicians in most
states.
Quality of Care.
No information is available regarding the effect of screening panels on quality of care, although one
unpublished study found no effect on any of six birth outcomes.37 There is no theoretical reason to
believe a relationship exists.
2.2.3. Summary
9A handful of well‐designed studies have examined the effects of pretrial screening panels, and the
weight of the evidence suggests that they are not effective in reducing claims costs, claim frequency, or
malpractice insurance premiums. They may help reduce defensive medicine. The evidence concerning
their effects on defense costs, physician supply, health insurance premiums, and quality of care is too
limited or equivocal to support conclusions about those relationships. Panels involve their own
administrative costs.
2.3. Certificate of Merit
Certificate of merit (COM) reforms require the plaintiff in a malpractice suit to present, at the time of
filing the claim or soon thereafter, an affidavit certifying that a qualified medical expert believes that
there is a reasonable and meritorious cause for the suit. Like pretrial screening panels, the rationale for
COM requirements is to reduce the number of nonmeritorious malpractice claims and associated
expenses by bringing expert judgment to bear early in the litigation.4 At least 11 states have adopted
COM requirements, but Washington State’s COM law was recently struck down on constitutional
grounds.41
2.3.1. Key Design Features and Decisions
Key design decisions for COM reforms include the following:
Time to filing of certificate: State laws vary in the time allowed to file the COM, with some
requiring simultaneous filing with the initial complaint and others allowing a few weeks or
months.
Definition of qualified expert: Some state statutes specify requirements concerning who may
serve as an expert witness for purposes of a COM—for example, a requirement that the
individual must spend most of his or her professional time practicing or teaching medicine, a
maximum amount of time that may be spent on expert witness work, a requirement that the
expert be certified in the same specialty as the defendant, or a requirement that the expert be
licensed in the state in which the claim is filed.
Nature of the affidavit: An affidavit sworn by the expert could be required, or it could be
acceptable for the plaintiff’s attorney to sign an affidavit attesting that he or she has obtained
an expert’s opinion that there is reasonable cause for filing the complaint. For expert affidavits,
varying levels of substantive detail could be required, from a simple statement that the expert
has reviewed the medical record and found there to be evidence of substandard care to a
detailed opinion concerning the deviation from the standard of care and how it led to the
plaintiff’s injury.
Nature of the attestation: At the outset of litigation, many facts concerning the plaintiff’s care
may be unclear. For this reason, some states have required experts to attest only that the
plaintiff has a reasonable cause to file the claim, or that a reasonable investigation gave the
plaintiff a good faith belief that grounds exist to file the claim. Others, however, require the
expert to state that after conducting a review, they conclude that the standard of care was not
met.42 This may be difficult to do early in the litigation when discovery has not yet been
completed and some facts are unclear.4
10 Exceptions: Statutes may be drafted to carve out an exception for res ipsa loquitur claims—
claims relating to injuries that ordinarily would not have occurred in the absence of a deviation
from the standard of care (for example, wrong‐site surgery). Arguably, an expert witness
affidavit is not necessary to establish that such claims have sufficient merit to proceed.
However, whether a particular injury constitutes a res ipsa claim may be unclear. Another issue
is whether to create an exception or extension for plaintiffs in cases where the defendant has
failed to produce the relevant medical records in a timely fashion, since this would hinder the
plaintiff from obtaining expert review of the case.42 An alternative mechanism for addressing
this problem is to include in the statute a requirement that defendants promptly comply with
plaintiff’s requests for document production during the period between the filing of the
complaint and the filing of the affidavit. This approach may help address conflicts between
COM requirements and state constitutional provisions guaranteeing access to courts.41
Consequences of failure to comply: In some states, where a plaintiff has not met all of the
requirements of the COM statute, the case is dismissed with prejudice (meaning that the
plaintiff cannot re‐file the complaint). Other states allow a plaintiff to correct technical
deficiencies in the affidavit of merit as long as the plaintiff is substantially in compliance with the
COM requirement. Still others impose sanctions on the plaintiff’s attorney for noncompliance.
2.3.2. Effects on Key Outcome Variables
Somewhat curiously, studies of state tort reforms have generally omitted COM statutes from their
analyses.4 Evidence concerning the effects of COM is extremely limited.
Claims Frequency and Costs.
No information is available regarding the effect of COM requirements on claim frequency or payouts.
Because COM requirements are often implemented as part of a package of several tort reforms, single‐
state studies that have found large reductions in the number of claims filed after implementation of
reforms43‐44 do not permit inference about the specific effect of the COM law. Anecdotally, plaintiff’s
attorneys complain that COM statutes with heavy sanctions for noncompliance are used to defeat
meritorious complaints: defendants allege some technical noncompliance with the requirement that
results in the plaintiff’s claim being dismissed.45 Some experts have made the observation that
experienced plaintiff’s attorneys routinely obtain an expert opinion before agreeing to invest in bringing
a case, calling into question the marginal value of a COM requirement.4 If this is true, as seems likely,
there is no strong reason to suspect that COM requirements will significantly reduce claims volume or
costs.
Overhead Costs.
COM requirements increase litigation costs for plaintiffs. Obtaining the affidavits entails direct costs for
plaintiff’s attorneys that are estimated at $1,000‐$5,000.46 In some states, COM requirements have led
to additional legal expenses when the defendant has challenged whether the plaintiff’s expert meets the
statutory requirements.46 Such wrangling is more likely to occur when the statutory language
concerning expert witness qualifications is vague or subject to interpretation.
Liability Costs.
11No information is available regarding the effect of COM requirements on malpractice insurance
premiums. The effect would be determined by the effect on claims frequency and cost. The theoretical
prospects for reductions in premiums are not strong.
Defensive Medicine.
No information is available regarding the effect of COM requirements on defensive medicine or health
care spending. There is no theoretical reason to believe there would be a significant effect, since COM
requirements do not appear to impose a substantial barrier to bringing malpractice claims. Reforms can
affect defensive medicine if physicians perceive them as protective, even if they are in fact ineffective.
However, there is no literature to suggest that physicians believe COM requirements provide strong
protection. Physicians tend to believe that expert witnesses are widely available to provide whatever
testimony plaintiff’s attorneys seek.
Supply.
No information is available regarding the effect of COM requirements on physician supply. The
connection would seem to be quite remote.
Quality of Care.
No information is available regarding the effect of COM requirements on quality of care. There is no
theoretical reason to believe there would be a significant effect. One study of birth outcomes found no
significant association between COM requirements and infant mortality.36
2.3.3. Summary
No methodologically strong studies have examined the effects of COM requirements. On their face,
COM requirements add a modest amount to the cost of litigation. Theoretically, the prospects for
affecting the key outcome variables appear quite weak.
2.4. Attorney Fee Limits
Attorney fee limits cap the amount of a malpractice award that a plaintiff’s attorney may take as a
contingency fee. Nearly all medical malpractice cases are handled by plaintiff’s attorneys on a
contingent‐fee basis, meaning that the attorney takes a percentage of any award the plaintiff receives
(legal expenses may be rolled into this percentage, or taken in addition to it), but the attorney receives
nothing if no award is recovered. The rationale for attorney fee limits is to discourage plaintiff’s
attorneys from accepting cases of marginal or no merit by altering the attorney’s expected return on
investment in the case. Sixteen states currently have limits on attorney fees in medical malpractice
cases.
2.4.1. Key Design Features and Decisions
Key design choices for attorney fee limits include the following:
12 Nature of the limitation: Fee limits are typically expressed as a percentage of the award, but
may also incorporate a maximum dollar value.
Flat or sliding structure: A single limit may be applied, or some states have opted for a sliding
structure that permits attorneys to take a larger share of smaller awards and a smaller share of
bigger awards.
Treatment of legal expenses: The fee limit may be specified to include all fees and expenses that
a lawyer would charge, or may apply only to the attorney’s fees. In the latter case, expenses
such as expert witness payments, deposition expenses, and document filing fees could still be
charged against a client’s award.
2.4.2. Effects on Key Outcome Variables
Claims Frequency and Costs.
Theoretically, attorney fee limits should reduce the number of malpractice claims by dissuading plaintiff
attorneys from accepting cases that have a low expected return on investment. This effect is not
targeted to nonmeritorious cases, as the expected value of a case to an attorney is a function of not only
the probability of prevailing, but also the expected damages and the attorney’s share of the damages.
Contrary to theory, there is strong evidence that attorney fee limits do not affect claiming. Several
multivariate studies have shown that attorney fee limits are not associated with either lower frequency
of claims6, 8 or lower average payouts.6, 8‐12 No studies have found a significant association with either of
these outcome variables.
Overhead Costs.
Theoretically, one may expect plaintiff attorneys to invest less time and resources in cases if their share
of the proceeds is reduced. However, since lower investment also increases the risk of losing the case
and recovering nothing, the theoretical relationship is unclear. Only one study has investigated this
issue; it found that attorney fee limits were associated with a significant increase in average defense
costs, possibly because attorneys were less inclined to bring small cases.17
Liability Costs.
There is strong evidence that attorney fee limits do not affect malpractice insurance premiums. Two
well‐designed studies8, 19 and two methodologically weaker studies12, 21 have reached this conclusion,
while no studies have found a significant association. The theoretical relationship to malpractice
premiums is quite remote, and is mediated by the effect on claim frequency and payouts.
Defensive Medicine.
The theoretical relationship between fee limits and defensive medicine or health care spending is
tenuous at best, but has not been extensively investigated. CBO’s 2006 model found no significant
effect on either general or Medicare health care spending.27 One recent study found no relationship
13with rates of cesarean section or vaginal birth after cesarean section.25 On the other hand, one study
found limited evidence that implementation of one or more “indirect” reforms (attorney fee limits,
periodic payment, joint‐and‐several liability reform, or patient compensation fund) reduced Medicare
payments for patients hospitalized for myocardial infarction, breast cancer, diabetes, or stroke.
However, the study’s authors expressed concern that the result might be spurious.24 Overall, the
existing evidence does not support a relationship between fee limits and defensive medicine or health
care spending.
Supply.
Three multivariate studies directly examined the relationship between attorney fee limits and physician
supply and found no relationship.31, 36, 47 Another examined whether states that adopted one or more of
5 “indirect” reforms (attorney fee limits, periodic payment, joint‐and‐several liability reform, statute of
limitations reform, or patient compensation funds) experienced different levels of growth in physician
supply over time and found that they did not.29 There is no strong theoretical relationship between the
two.
Quality of Care.
No studies have directly examined the effects of attorney fee limits on quality of care. There is no
strong theoretical relationship between the two. One study found no relationship between “indirect”
reforms, including fee limits, and 1‐year mortality among Medicare patients,24 and two others found no
association between attorney fee limits and birth outcomes.36‐37 Overall, the limited evidence available
does not support an inference that attorney fee limits affect quality of care or patient outcomes.
2.4.3. Summary
Several well‐designed studies have evaluated the effects of attorney fee limits and have uniformly found
no effect on claim frequency, claims payouts, malpractice insurance premiums, or physician supply. The
limited available evidence concerning defensive medicine and quality of care suggest that fee limits have
no effect on these variables.
2.5. Joint‐and‐Several Liability Reform
At common law, when an award was made against more than one defendant, each defendant would
individually be fully liable (“jointly and severally liable”) for paying the amount of the award in the event
that the others did not pay, even if he bore only a small share of the causal responsibility for the
plaintiff’s injury. For example, if two physicians were both found liable for malpractice in the amount of
$5 million, but one was insured for only $1 million and had no personal assets that could be used to
satisfy the judgment against him, the other physician would be liable for the remaining $4 million.
Thirty‐nine states have adopted statutes modifying this common law rule to limit the financial liability of
each defendant to the percentage fault that the jury allocates to that defendant. The rationale for this
reform is to eliminate the unfairness involved in joint‐and‐several liability for “deep pockets” defendants.
2.5.1. Key Design Features and Decisions
The key design decisions for joint‐and‐several liability reform include the following:
14 Applicability to types of damages: Joint‐and‐several liability can be abolished for all components
of a plaintiff’s award, or only for the noneconomic damages portion of the award.
Relationship to comparative negligence: Joint‐and‐several liability can be abolished in all
instances, or it can be maintained when a defendant’s percentage share of the responsibility for
an injury exceeds a certain threshold (typically 50 percent).48
Relationship to private contractual arrangements: Two or more parties who reasonably
anticipate that they may be named as joint defendants in malpractice litigation—for example, a
hospital and a physician who has staff privileges at the hospital—may choose to specify in a
contract how liability will be allocated between or among them. Joint‐and‐several liability
reforms can be designed to respect these contracts or to supersede them.
2.5.2. Effects on Key Outcome Variables
Claims Frequency and Costs.
The theoretical link between joint‐and‐several liability reform and claim frequency is highly tenuous. If
many defendants were expected to default on their judgments, then the expected value of malpractice
claims would be lower and plaintiff’s attorneys would be discouraged from bringing them.27 There
would need to be a widespread belief that defendants commonly had insufficient resources to cover
judgments in order for this to occur, however. Two studies have examined whether joint‐and‐several
liability reform results in fewer claims. One found a significant reduction in per‐capita claims
frequency,5 while the other found no significant association.6 Overall, the evidence on this point is
limited and inconclusive.
Four multivariate studies have examined the association between joint‐and‐several liability reform and
claims payouts; none found an association.5‐6, 12, 16 However, one study found the presence of joint‐and‐
several liability reforms to be associated with lower long‐run medical malpractice losses for some, but
not all, liability insurers.15 (Insurer losses reflect both the number of paid claims and the average
payment, and the study could not determine which component drove the lower losses.) Joint‐and‐
several liability reform theoretically should result in lower claims payments for some defendants and
higher payments for others, in cases in which one of the defendants could not pay his entire share.
Overall, the evidence is weighted towards the conclusion that joint‐and‐several liability reform does not
significantly affect claims costs in the aggregate.
Overhead Costs.
There is no clear theoretical link between joint‐and‐several liability reform and litigation expenses. One
study has examined this relationship and found no significant association between the reform and
defense costs.17
Liability Costs.
The effect of joint‐and‐several liability reform on malpractice insurance premiums has been studied by
several research teams, with mixed results. Two strong studies15, 19 and one weaker study20 found no
relationship to insurance premiums, while 3 studies with somewhat weaker methodologies found a
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